A mannequin of the pure gas pipeline is positioned on Russian Rouble banknotes on this illustration taken, March 23, 2022. REUTERS/Dado Ruvic/Illustration
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BERLIN, May 9 (Reuters) – An abrupt cease in deliveries of Russian pure gas may set off a recession in Germany comparable with the financial crisis years of 2020 and 2009, if not worse, in accordance with a study launched on Tuesday.
Such an embargo, whether or not triggered by the European Union or Russia, would result in a fall in manufacturing within the first 12 months of between 114 billion euros ($120 billion) and 286 billion euros, similar to about 3%-8% of gross home product (GDP), the IMK institute stated.
The study by economist Tom Krebs additionally stated financial output in Europe’s largest financial system may fall by an additional 2-4% because of sagging demand on account of excessive power costs.
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A sudden gas embargo may set off a recession much like that seen within the first 12 months of the pandemic or the monetary crisis of 2009, Krebs warned. It “could also lead to an economic crisis the likes of which (West) Germany has not seen since World War Two,” he stated.
The University of Mannheim economist discovered six German industries to be significantly reliant on pure gas: chemical substances, specifically primary chemical substances; metallic manufacturing and processing, in addition to foundry, glass and ceramics; meals; paper; mechanical engineering and automobile manufacturing.
“For these industrial sectors, natural gas is an essential input factor in the production process and it is difficult to replace,” Krebs stated.
($1 = 0.9521 euros)
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Reporting by Rachel More; modifying by David Evans
Our Standards: The Thomson Reuters Trust Principles.
Sudden Russian gas embargo would inflict new crisis on German financial system, study says & More Latest News Update
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